ENA response to first report of Government Electricity Price Review

News | 11 Sep 2018

Electricity distributors have welcomed a report on the status of New Zealand’s electricity industry, and will be preparing a detailed and measured response to its findings.

“The report focuses on transitions that need to happen to ensure that New Zealand consumers continue to have a reliable, safe, and efficient electricity sector in the future,” said Graeme Peters, chief executive of the Electricity Networks Association.

“The report is correct when it says that the electricity industry delivers a high-quality commodity to New Zealand’s two million households and businesses, and that it delivers with 99.97% reliability.”

“New Zealand’s electricity industry could always be improved but it is not broken or in crisis, and is actually in very good shape, serving customers well.”

However, the report does point out some areas for improvement, especially in the knowhow, capability or motivation of consumers to access the benefits of retail competition and save money on their bill.

“The panel has found that a two-tier market has developed – a small group of highly-motivated consumers who are shopping around and benefitting from competition, and a larger group of customers who are not. They’ve also found that many consumers are not taking advantage of, or not in a position to access, their prompt-payment discount. These findings are correctly identified as key focuses for improvement.”

Overseas studies of electricity prices have similarly found that consumers could save money but are not benefitting or taking the opportunity to benefit from the best deals available to them. The Electricity Authority estimated recently that residential consumers could save a total of $375 million a year if they switched to lower tariffs.

The report also focuses on the potential for energy technology “have’s and have nots’’ and the potential for cross subsidies to occur, especially hurting lower-income households.

“One of the solutions to improve this situation right now would be for the government to remove 2003 regulations which result in larger low-income households with no other energy sources, cross-subsidising the electricity bills of smaller households which can afford new technologies.”

The report says that there are better solutions to supporting low-income households than the regulations. “The entire electricity sector would agree,” Peters said.

Other transitions which would benefit consumers in the long term, and the industry is already working on, are in the areas of distribution pricing reform, access to meter data, and regulatory settings.

The distribution sector will be talking to the panel about its view that there is a need for regulation of access to distribution networks.

“Adoption of new technologies to benefit consumers is in its infancy and in many cases, the distributor might be best placed to introduce new technologies. It would be premature to regulate hastily and therefore close off or restrict consumer access to new technologies,” Peters said.

About ENA

The Electricity Network Association (ENA) is the industry membership body that represents the 27 local electricity distribution businesses (lines companies) that take power from the national grid and deliver it to homes and businesses

The ENA harnesses the collective expertise of members to promote safe, reliable and affordable power for our members’ customers.